Facilities leaders do not need another reminder that costs are increasing. They see it every budget cycle. What matters now is why costs are accelerating and which decisions actually reduce spend over time.
Recent data from the NACS State of the Industry Report makes the trend clear. Since 2020, Direct Store Operating Expense (DSOE) has increased more than 55%. Over the same period, facility expenses have risen even faster. In 2024 alone, facility costs climbed 11.8%, outpacing the 7.1% increase in overall DSOE.
This gap signals a fundamental issue. Facilities are still being managed transaction by transaction, while the cost drivers live at the asset level. Lowest invoice thinking no longer works. Total Cost of Ownership (TCO) is becoming the required lens.
Between 2022 and 2024, total DSOE rose 12.7%, while repairs and maintenance increased 17.3%. Facilities are not just getting more expensive. They are consuming a larger share of operating budgets.
That growth is being driven by compounding factors:
The result is a reactive cost structure that scales poorly across large portfolios.
Negotiating lower hourly rates is a common strategy, but it rarely reduces total spend. In a multi-site retail portfolio analysis, annual maintenance costs exceeded $37,000 per store versus a $27,000 benchmark, while average cost per work order was 12% higher despite competitive labor rates.
The issue was not pricing. It was execution:
More than 23% of reactive repairs were repeats within 30 days. That is not a rate problem. It is an asset management problem.
TCO reframes the decision. Paying more per hour can reduce total spend if it lowers repeat visits, labor duration, downtime, and callbacks.
Unplanned maintenance typically costs 3 to 9 times more than planned maintenance. Vixxo analysis shows that eliminating just one reactive work order can deliver up to 3X return compared to the cost of preventive maintenance.
Portfolio analysis shows that roughly 10% of HVAC repairs occurred within 14 days of a preventive maintenance visit, and 17% within 30 days. Preventive maintenance lowers total cost only when quality and execution are consistent.
When assets are managed proactively:
That is the difference between managing invoices and managing assets.
Across large portfolios, roughly 10% of locations often generate 25% or more of facilities spend. These sites typically have aging equipment, chronic failures, or inconsistent service execution.
Average cost per work order matters, but repair volume matters more. Reducing failure frequency delivers more durable savings than shaving dollars off individual invoices.
TCO-based programs identify and stabilize these outlier assets first.
Many retailers invested in Computerized Maintenance Management Systems (CMMS) expecting cost reductions. CMMS platforms improve visibility, but not automatically cost. In a multi-site retail portfolio, maintenance spend increased more than 20% year over year despite strong CMMS adoption. Without validation and accountability, technology only tracks overspend.
Facilities is no longer a back-office function. It is an asset performance discipline.
As HVAC, refrigeration, foodservice, signage, and energy systems directly impact revenue and margin, facilities decisions must be made at the lifecycle level. Organizations that continue to manage by invoice instead of asset performance will continue to see costs rise faster than revenue.
TCO does not eliminate spend. It makes spend predictable, defensible, and aligned to long-term performance.
Facility expenses are rising faster than overall store operating costs, and that gap is not closing. The organizations that stabilize spend are shifting from reactive work order management to Total Cost of Ownership strategies that treat facilities as assets, not invoices.
In today’s environment, the cheapest repair is rarely the lowest cost decision.
What is Total Cost of Ownership in facilities management?
Total Cost of Ownership (TCO) includes all costs incurred over an asset’s lifecycle, including repairs, preventive maintenance, energy use, downtime, repeat calls, compliance risk, and end-of-life replacement.
Why do facilities costs rise faster than DSOE?
Facilities costs are driven by aging assets, inflation, labor shortages, emergency repairs, and repeat failures. Without proactive management, these costs compound faster than other operating expenses.
How can facilities teams reduce spend without cutting service?
By focusing on repair quality, reducing repeat work orders, executing high quality preventive maintenance, and using invoice-level controls to prevent overcharges. TCO-based strategies target volume and lifecycle efficiency rather than hourly rates.
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